Scandal-hit Olympus revealed on Tuesday it had found that funds related to its purchase of British medical equipment maker Gyrus as well as three domestic firms were used to hide losses on securities investments dating back to the 1990s.

The revelation by the Japanese maker of endoscopes and cameras was the biggest disclosure yet about the mysterious deals. Hours later the company said it would fire Executive Vice President Hisashi Mori.

Lawyers and analysts said the disclosure by Olympus opened up the possibility of criminal charges for suspected accounting fraud, as well as shareholder suits against Olympus directors and the company's delisting from the Tokyo Stock Exchange.

"This is very serious. Olympus admitted it has made false entries to cover its losses for 20 years. All people involved in this over 20 years would be responsible," said Ryosuke Okazaki, chief investment officer at ITC Investment Partners. "There is a serious danger that Olympus shares will be delisted. The future of the company is extremely dark."

The announcement sent Olympus shares down 29 percent to a 16-year low on Tuesday. The company has lost 70 percent of its value since it fired ex-CEO turned whistleblower Michael Woodford on Oct. 14.

"It's big. Olympus was supposed to be a paragon of corporate society," said Darrel Whitten, managing director at Investor Networks Inc, an investor relations consultancy.

The 92-year-old company said in a statement that its new president, Shuichi Takayama, would hold a news conference at 0330 GMT to elaborate on the matter, which it said had come to light as part of its cooperation with a third-party panel set up to investigate the transactions. That panel was announced a week ago.

"Through this process (of the third-party investigation), we found that from the 1990s the posting of losses on securities investments had been deferred," the company said.

The company said it had funnelled money related to the acquisitions through various funds and other measures to defer posting the losses, a practice seen in the days after Japan's bubble economy of soaring asset prices burst in 1990.

The scandal is the biggest in Japan since Livedoor entrepreneur Takafumi Horie's challenge to the business establishment ended with charges of securities fraud in 2006.

"The members of the board appear to have breached their fiduciary duty owed to the company and to the shareholders," said Keiji Isaji, an attorney with K&L Gates law firm in Tokyo.

Lawyers said that if Olympus were found to have knowingly falsified its consolidated financial statements that were deemed material in nature, its representatives could face up to 10 years in prison or a fine of up to 10 million yen.

A spokesman for the Tokyo Stock Exchange said the bourse needed more information before deciding whether to put Olympus shares under supervision, a step towards possible delisting.

The TSE spokesman said it needed to examine the size of the deferred losses and whether they had an impact on shareholders' investment decisions before taking any further action.

Reuters reported last week that Olympus replaced its auditor in 2009 after a disagreement over how to account for the acquisitions.

In a confidential internal document obtained by Reuters, Tsuyoshi Kikukawa, the firm's then president, wrote to Olympus executives in the United States and Europe, revealing there had been a disagreement with auditor KPMG which he did not plan to disclose to the stock market.

In May 2009, Kikukawa announced the contract with KPMG had ended and that another global accounting firm, Ernst & Young, would take over. Kikukawa resigned on Oct 26. Executive Vice President Mori had been Kikukawa's right-hand man.

Olympus has come under increasing pressure to disclose more information to address shareholder concerns in an escalating scandal that has prompted law enforcement agencies in Japan and the United States to investigate.

The company suddenly fired Woodford on Oct. 14, saying he failed to understand the company's management style or Japanese culture.

Woodford said he was forced out for questioning the $687 million paid for advice on the $2 billion Gyrus acquisition in 2008, the biggest fee in M&A history.

Woodford also questioned the acquisitions of three small Japanese firms whose value had been largely written off after the purchases.

Woodford told Reuters on Tuesday the Olympus board should resign. "The position of the board and non execs is untenable now," Woodford said by phone from London.

He added that it was his "desire" to return to manage the endoscope maker should shareholders wish to reinstate him.

Prodded by institutional shareholders, Olympus has named six men, including a former Japanese supreme court justice, to investigate the past M&A deals.

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U.S. stocks declined on Tuesday in a retreat from the previous session's sharp rally, but major indexes remained on track for first-quarter gains and the S&P 500 was set for its ninth straight quarterly rise.